I started back in April 2021, putting 5%/$40,000 down as a deposit on a to be constructed new home, supposed to be finished in June 2022. I had been saving for years for this moment - and here it was, at long last. I thought I was smart - didn't have to deal with a realtor, didn't have to worry about being outbid, didn't have to worry about a home inspection or buying a fixer-upper.
I rate locked for 240 days back in January 2022 at 2.85%. A steal. . . my current rent for a 2 bed 2 bath was $2,750. Here was my chance to own a 3 bed 3 bath brand new townhome - own, not rent for a monthly mortgage payment of $3,060.
Here's where things went sideways. I thought 240 days would enough for a rate lock. Construction was to be done by June 2022 - I even accounted for delays in construction, so 240 days would put me into September, 3 months past the expected completion. As the date crept closer, the progress on the house slowed down. June completion wasn't happening. Neither was July. Or August. . . . and so on and so forth. Simultaneously, rates kept rising. 3%. . . 4%. . . 5% . . .
Around July, I received notice from the builder that they had encountered substantial delays and the close date would now be November. Panicked, I called my lender and asked about a rate lock extension. By now, rates were around 6.5%. We were able to negotiate a rate lock extension starting at the expiry of the original rate lock - 60 days past, which would take me into November. The rate lock cost me an additional $10,000 but to save 3.65% on my mortgage was worth it.
And then, tragedy. Again, delays from the builder. Estimated completion is now February 2023 - 9 months past when it was supposed to be complete. I asked my lender is there any option to do an additional extension - to which they declined. I am now stuck at shopping around for rates. No one is willing to extend a rate to February, let alone any longer. Rates are currently at 7.5%, who knows what whenever this thing is finished. At 7.5%, my monthly payment would be $5,200 - $2,200 more than it would have been if the builder had finished on time. Something that would demolish my monthly budget.
And so, without a lender, without any recourse, and most importantly, without a home, I am forced to end my homebuying adventure and back out of the contract. The builder is claiming "pandemic delays", which allows them to unilaterally extend the closing date without recourse. They will pocket my hard-earned deposit money, and I will return to my apartment, defeated, and begin saving once more, minus the $40,000 I wasted on a gamble.
